Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold dipped 0.1% to close under $1,189 in choppy trade after mixed U.S. data on consumer spending and manufacturing complicated the outlook for interest rates.

Consumer spending was weaker than expected in April, the Commerce Department said today, posting no gain at all after rising 0.5% the previous month. The soft report cast a shadow on prospects for a second-quarter rebound in GDP, which contracted by 0.7% during Q1.

Gold initially surged 1% to $1,205 in intraday trade as the dollar receded on speculation that the weak consumer spending data would make the Fed more likely to postpone hiking rates until later in the year. Higher rates would strengthen the dollar by increasing its yield relative to other currencies, in turn weighing on gold and other commodities denominated in it for international trade by making them more expensive to foreign buyers.

The markets quickly reversed direction, with gold falling back and the dollar rallying, after the Institute for Supply Management reported that manufacturing rose slightly more in May than April, suggesting momentum to the economy. Rationale for the change in sentiment was murky, however, as Markit's PMI showed manufacturing falling in May, conflicting with the ISM report.

The other precious metals were mixed, with silver edging up 0.2% while platinum and palladium fell 0.6% and 0.4%, respectively.

At the Comex close: August gold dipped 0.1% to $1,188.70; July silver added 3 cents, to $16.74; July platinum dropped $7.50 to $1,104; and September palladium lost $3.40 to $773.70.